ASIC has commenced proceedings in the Federal Court against Cigno Pty Ltd (Cigno) and BHF Solutions Pty Ltd (BHF Solutions) for alleged contraventions of the National Consumer Credit Protection Act 2009 (National Credit Act).
BHF Solutions and Cigno operate a lending model that provides small amounts of credit to a large number of consumers and charges substantial fees on the amounts borrowed. Neither BHF Solutions nor Cigno holds, or has ever held, an Australian credit licence as required by the National Credit Act.
ASIC alleges that between 18 October 2019 and 31 March 2020:
BHF Solutions contravened section 29 of the National Credit Act by engaging in credit activity without holding an Australian credit licence by entering into credit contracts with three borrowers and carrying on a business of providing credit; and
Cigno contravened section 29 of the National Credit Act by engaging in credit activities without an Australian credit licence by performing obligations and exercising rights of BHF Solutions in relation to BHF Solutions’ credit contracts with the three borrowers and providing a credit service to the borrowers.
The National Credit Act requires firms who engage in specified credit activities to be licensed or authorised. The National Credit Act and National Credit Code impose important obligations on firms that provide protections for consumers including disclosure requirements, a cap on fees and interest rates and access to hardship and free and independent external dispute resolution services.
ASIC is seeking:
declarations of contravention of section 29 of the National Credit Act by both BHF Solutions and Cigno;
permanent and interim injunctions under section 177 of the Act restraining BHF Solutions from engaging in the credit activities of being a credit provider under a credit contract and carrying on a business of providing credit; and
permanent and interim injunctions under section 177 of the Act restraining Cigno from engaging in the credit activities of providing a credit service and performing the obligations, or exercising the rights, of a credit provider in relation to a credit contract or proposed credit contract.
The proceeding will be listed for directions on a date to be determined by the Court.
